Analyst Shaw Wu with Sterne Agee said in a note to investors on Tuesday that he has found in his checks with suppliers that Apple has reduced iPhone orders by between 20 and 25 percent from the 35.1 million units the company shipped in the March quarter.
If those numbers hold for the current June quarter, that would result in shipments of between 26 million and 28 million iPhones. That result would be below Wall Street consensus of between 30 million and 31 million.
Wu also noted that investors should factor in the 8.6 million iPhones Apple has in the channel inventory, with 2.6 million added in the most recent quarter. That channel inventory allowed the company to reach a supply-demand balance of between 4 and 6 weeks.
"From our understanding, the reason for the reduction is not demand related but rather due to the upcoming 6th generation iPhone refresh likely in the September-October timeframe," Wu wrote. "It appears AAPL is opting to be conservative with its suppliers to factor in a potential 2-quarter pause ahead of the refresh and also to manage inventory."
Last year, Apple reported record sales of 20.34 million iPhones during the June quarter. That bested analyst expectations, which were as low as 15.8 million.
But in the following September quarter, iPhone sales were 17.07 million, or 21 percent year over year growth, as Apple drew down inventories ahead of the iPhone 4S launch. That came in below expectations, as analysts predicted sales of around 20 million iPhones for the quarter.
Wu noted that Wall Street consensus last year "grossly underestimated the impact of a pause and inventory drawdown ahead of the iPhone 4S." He believes investor expectations should be drawn in for the June quarter as well as the following September quarter.
But while he doesn't expect a significant upside for iPhone sales in the coming quarters, Wu does believe the iPad has the potential to impress investors. Specifically, he has heard that Apple has increased build plans for its third-generation tablet.
Previously, shipments of the new iPad were held back by manufacturing issues with the new high-resolution Retina display. Earlier this month, estimated shipping times improved to between 3 and 5 business days as availability improved.
Wu said Retina display availability has been addressed by adding an additional supplier, beyond Samsung. He believes this will allow Apple to meet strong demand for the new iPad in the coming quarters, enabling the company to deliver upside compared to consensus investor expectations.
24 Comments
What an idiot. First, there's no reason to believe that he has any idea what's going on based on his history. But even if he does, his 'reduced expectations' are for a 30% increase over last year's June quarter. Why the negativism?
fantastic!... I was worried that Apple was not going to produce a new iPhone! /sarcasm Ah, Yes September is when school is in session, and Apple "Schools" the Cell phone industry... so june is out of the question?...
This all reminds me of the 'experts' at the start of the season discussing which team will win the Super Bowl and why or which horse will win the Derby and why .....
Anal .....yst... Just so stupid. Sheeeze!! Do these guys ever get it right or do they just throw a deck of cards up in the air to make their predictions.???
As soon as I see analyst.. I ignore it.
They get more wrong, than they get right. That said, I dont think there's a snowballs chance in hell that we wont see a completely redesigned 4G/LTE iPhone5 with a bigger screen in the next 6 months. As a 4 & 4S owner.. network speed & small screen are truly my only major complaints. I would think most people owning a 4 or 4S would agree.